It is anticipated that rents for commercial office space in London will increase over then next year, due to demand in the capital.
More demand for office space in London
Office space in London is growing in demand, according to data collected by JLL. They have calculated that commercial leasing activity in the City and West End will be at similar take-up levels for 2019.
For example, approximately 10.7m sq ft of office space in the centre of the capital has been transacted, wit 3m sq ft still under offer at year-end. This means that the total take-up for 2019 is to be ahead of the 11.5m sq ft of office space that was leased out to businesses in the year previously.
High levels of leasing activity in 2019
The prediction that take-up levels for commercial property will be similar this year as they were in 2019 will likely mean higher rents.
Which areas of London are experiencing demand for office space?
Based on data collected by JLL, it is thought that the City will have leased over 6.7m sq ft of space, which is an increase from 2018.
The West End commercial space take-up will be 3.9m sq ft at the end of the year.
Meanwhile, take up in East London has reached 1.1 sq ft but it is expected to increase to 1.2 m sq ft by the year-end. This part of London is experiencing a significant demand in leasing activity, as overall, it has risen by 63 percent in 2018. The main reason for this is down to the EBRD deal that was agreed at 5 Bank Street in the Canary Wharf area.
Reduction in future supply will drive office demand
It is expected that occupier demand will increase dramatically leading to higher rents. for example, 50 percent of new space currently being built has already secured pre-lets. Similar high rates of occupier demand can be found in the West End, with this figure increasing to 62 percent.